Jones Lang LaSalle: NewBuy will get Bristol market moving16th March 2012

The government’s new mortgage indemnity scheme is good news for Bristol’s economy according to property consultants Jones Lang LaSalle. 

Despite strong demand, Bristol has very little new-build residential property coming onto the market this year, leaving would-be purchasers with few options in the city centre.

The absence of new-build development coming forward is due to a lack of confidence from lenders together with buyers being unwilling to put money down for homes that are not yet built.

Generally, developers need 20% of pre-sales to start on a project, but in the current climate very few buyers are willing to put money down for something that isn’t built.

The NewBuy scheme, which will help banks lend up to 95% of the value of new homes, will enable more first-time buyers to get onto the property ladder, reassuring lenders to invest in development and providing a vital kick-start for Bristol’s new-build residential market.

Vicky Dudbridge, associate director in Jones Lang LaSalle’s residential team in Bristol office, said:

“It’s a chicken and egg situation. Developers won’t build without the money from lenders, and the money isn’t there for something that’s not built." 

“It’s a chicken and egg situation. Developers won’t build without the money from lenders, and the money isn’t there for something that’s not built." 

“The NewBuy scheme will encourage people to purchase new-build homes, which will in turn give lenders the confidence to fund projects so the residential market can start moving forwards again.”

In central Bristol there is some development coming through the pipeline for purchasers, but it will be early 2013 before anything completes. Currently the only available ready-to-move in stock is at Finzels Reach.

“The demand for new-build residential in Bristol has never gone away, despite the sluggish residential market nationally, yet currently in central Bristol there is only new-build stock available at Finzels Reach and once this is sold there is nothing else expected to come through this year," Dudbridge added.

“Even if a new project begins later in the year, it will be 12 months before anything completes.”

With buyers constrained by a lack of supply, the rental market is experiencing a knock-on effect as residential rents continue to increase in Bristol.

NewBuy is backed by the Home Builder’s Federation (HBF) and the Council of Mortgage Lenders and seven construction firms.
The scheme is available on flats and houses up to a maximum value of £500,000 in England only.